1Q20 Results Discussion
<
Listed
portfolio
Georgia Healthcare Group (GHG) overview
http://ghg.com.ge/
Investment rationale
"
"
Very low base: healthcare services spending per capita only US$ 308 (EU average
is US$ 3,2111)
Growing market: healthcare spending growth estimated at 8% CAGR 2020-2021
Value creation potential
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"
"
High-growth potential driven by opportunity to develop medical tourism,
polyclinics (outpatient clinics) and new markets (beauty, aesthetics, lad retail)
Only integrated player in the region with significant cost advantage in scale and
synergies
Well positioned to take advantage of the expected long term macroeconomic and
structural growth drivers
GEORGIA
HEALTHCARE
GROUP
Total healthcare market (including healthcare services and pharmacy)
GEL million
GEORGIA
CAPITAL
Total Market CAGR 2020-2021
of 8%
CAGR
Total Market CAGR 2011-2019 of 13%
4,765
20-21
4,397
3,760
3,488
2,464
2,034
1,552
1,716
543
438
3,062 3,218
607
696
1,217
1,092
4,062
806
968 10%
884
734
669
1,722 7%
1,311
1,404
1,504
1,611
305
343
908
782
675
714
573
659
814
1,013
1,273
1,395 1,508 1,622
1,752
2,075
1,903
9%
2011
2012
2013
2014
2015
2016
2017
2018E 2019E
2020F 2021F
Pharma
Hospitals Polyclinics
Hospitals
Medical
Insurance
• Double digit revenue
CAGR
• Double digit revenue
CAGR - 20%+
• Double digit revenue
CAGR
Increase contribution
to the Group segments
10%
9%
9%
9%
8%
Gradually improving to
28-30% EBITDA margin
8%
.
Gradually improving to
•
9%+ EBITDA margin
• Combined ratio <97%
25% EBITDA margin
ROIC enhancement and substantially increased free cash flow generation
following the completion of significant three-year investment programme in 2018.
(1)
Source: World Bank, 2016 data.
Medium to long
term strategic
targets by
segment
Clinics
Source: Frost & Sullivan analysis 2017
Pharmacy and
Distribution
State healthcare spending dynamics
GEL million
Double digit revenue CAGR
next 5 years
GHG medium to long term targets
Mid-teen EBITDA CAGR
next 5 years
Gradually approaching ROIC
c.15-17%
Given the current level of uncertainty due to COVID-19, the Directors of GHG decided not to recommend a dividend to shareholders at
the 2020 AGM.
Since the spread of the COVID-19, GHG announced readiness to support the Government of Georgia in its efforts to fight the spread
of the virus in light of a spike in healthcare demand.
681
710
760
754
757
574
281
343
305
329
337
377
2015
2016
2017
2018
2019E
2020B
State Healthcare Spending - UHC
I State Healthcare Spending - Other
Healthcare spending as a % of total state spending
Source: Ministry of finance of Georgia
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